Think of a dividend like a reward you get for being a part of a club. Imagine there’s a club where everyone puts in some of their favorite toys. Every month, the club gets more toys from other places, and at the end of the month, the club gives out some toys to everyone who is a member. This special toy you get is like a dividend. It’s a way of saying ‘thank you’ for being a part of the club.
Another way to think about a dividend is like sharing a birthday cake. When it’s your birthday, you have a big cake, and you share pieces with all your friends. The cake is the money a company makes, and the slices you give to your friends are the dividends. Everyone gets a piece because they came to celebrate with you, just like how people get dividends because they own a part of the company.
Picture a tree that grows apples. If you help take care of the tree by watering it and making sure it gets sunlight, the tree will grow apples. These apples are like dividends. You get to keep some apples because you helped the tree grow, just like you get dividends for helping a company grow by being a part of it.